Defeatism is spreading in Germany. The reason for this is the weakness of the economy. There are fears that the oscillation between stagnation and recession in the EU's largest economy will become permanent. If even the country's elites, and this includes above all the leading politicians in Berlin and those responsible for large and medium-sized companies, doubt that tried and tested virtues will be enough to lead the economy out of the current trough, then the German economy is in a bad way.

Entrepreneurial and economic policy behaviour has a lot to do with psychology. Self-doubt, constant complaining, and the search for others to blame for shortcomings and defects, mean that initiatives aimed at turning the wheel around are slowed down, or not even tackled.

With three weeks to go ahead of the early elections, there is a perceived deadlock in Germany in this respect. Even after that, it would almost take a miracle for a newly formed government to seriously tackle the structural problems, instead of just working on individual points as has been the case up to now, in order to avert the threat of a long-term loss of prosperity.

However there are plenty of positive examples in the economy, that can be seen as an opportunity to get out of the mess. One of these examples is MTU Aero Engines. This traditional high-tech company can be seen as the antithesis of the supposed continuous decline of Germany as a business location. The chequered history of the Munich-based aircraft engine manufacturer, which in 2025 will have been listed on the stock exchange for 20 years, teaches us this. MTU is a lesson in how companies can and must constantly adapt to new situations to ensure their continued existence and further growth.

The origins of MTU lie with BMW. Founded in 1916 in the middle of the First World War, Bayerische Motoren Werke was forced by the Treaty of Versailles to abandon its original production of aircraft engines for the military, and switched to the manufacture of cars and motorbikes during the Weimar Republic. When the Nazis came to power in 1933, the construction of aircraft engines was resumed as a result of the rearmament of the German Reich.

In the post-war period, MAN acquired BMW's aircraft subsidiary. When Daimler-Benz joined the company in 1969, the then-joint venture was renamed Motoren- und Turbinen-Union, or MTU for short. After MAN's exit, Daimler-Benz made MTU part of its strategy of an „integrated technology group“ under the direction of then-CEO Edzard Reuter. In 2003, MTU was acquired by US private equity firm KKR, which floated the company on the stock exchange in June 2005, and subsequently sold all its shares.

Anyone who subscribed to the IPO and held onto the shares has seen the value of their investment increase more than tenfold to date. Over the same period, the Dax, to which MTU has been a constituent stock since 2019, has increased more than fivefold. With a market capitalisation of almost 18 billion euros, MTU is one of the established German blue chips.

The fully free-float company draws its strength in particular from a structural peculiarity of the Western-dominated engine industry. MTU operates in an oligopoly, in which cooperation between the companies involved is a core feature of the relatively closed market, due to the capital-intensive nature of the business, and the long life cycles of the products.

MTU can live well in this environment. The upturn in air traffic following the coronavirus pandemic is giving Airbus and Boeing suppliers a tailwind. Up-and-coming China, which is building up its own aviation industry, will not be able to shake this stable business model.